July 21, 2021

Get creative with bridging loans

creative bridging loans

 

 

Did you know that bridging loans can be an extremely useful option for your property professional and business clients in need of a short-term cash injection, as well as normal residential customers? 

Here are 8 popular uses of bridging finance:

Property Chain Break

Home movers who are using the sale of their current home to finance the purchase of the new property, can sometimes find themselves in a broken property chain.

A bridging loan can ensure there’s no disruption to the chain, with the bridge used to purchase the new property.

Once the original property has been sold the funds from that sale will be used to exit the bridging loan. This is the most common use of bridging finance. 

Auction Property

The speed at which bridging finance can be arranged is particularly useful when buying properties at an auction.

The full price of an auction purchase is required within 28 days, it is extremely unlikely that the purchaser will be able to arrange a mortgage within that time frame.

A bridging loan will allow the auction sale to be completed, providing the buyer the time needed to arrange a mortgage.  

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Commercial Short Term Cash Flow

There are many reasons why a business can experience cash flow problems, such as outstanding invoices or upfront expenses to cover.

A bridging loan enables the business to quickly access funds, without disruption to the day-to-day running. 

Property Conversion

Properties that are run down are usually considered unsuitable for a mortgage maybe because there is no kitchen, bathroom or running water.

A bridging loan can be secured against the property, allowing the owner to purchase the property and undertake the necessary work to make the property habitable.

The property can then be sold or refinanced with a traditional or buy-to-let mortgage.

Japanese Knotweed

A bridging loan can be used to finance the work required to remove knotweed from a property.

Many lenders will decline finance or withhold an offer until the Japanese knotweed has been removed as it can damage building foundations, drainage systems, and walls.

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Unexpected Tax Bill

Some businesses may choose to use a bridging loan to pay a tax bill that is larger than they were expecting and that they are unable to pay within the required timeframe.

This allows the business to pay immediately, avoiding a late payment fine. 

Development Finance Exit

When a developer reaches the end of the terms set out in their development finance, they will be required to repay the loan in full to the lender.

If the development hasn’t been sold, then bridging finance can provide developers with some much-needed time to repay the lender and before focusing on the sale of the development.

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Repossession Prevention

To avoid a property being repossessed, the property owner may decide to use a bridging loan to pay off the debt; enabling the owner to retain control of the property and sell on their own terms.

Bridging with Enterprise Finance

Putting over a decade of specialist finance distribution experience to work, Enterprise Finance has access to lenders with the flexibility to consider each exit strategy on its merits, high conversion rates, and quick turnarounds. 

Our key features include:

  • No early repayment charges.
  • Interest roll-up for zero monthly payments.
  • Up to 85 – 100% LTV available with additional security.
  • Peace of mind that your clients’ cases are being dealt with by industry-leading experts.Finance can be used to purchase or re-mortgage as a first or second-charge loan.
  • Loans can be secured against all property types: houses, flats, commercial units, land with planning, uninhabitable, and un-mortgageable properties.

To find out more about our range of bridging loans, speak to Enterprise Finance today.